Commodity prices are surging and stock markets are continuing to hit new highs.

Yet, there are very real fears about the reopening of Western economies being jeopardised by new variants of the virus for which existing vaccines may not be effective, coming on top of lingering doubts about the effectiveness of the vaccines being rolled out, at varying pace, across the globe.

Some are even thinking of a commodity super cycle: the Bloomberg commodity index is up 6.5 per cent year to date, 10.3 per cent year on year.

Growth expectations are also being steadily upgraded.

The IMF recently upgraded its forecasts for global growth this year (5.2-5.5 per cent), and for the US (5.1 per cent), Eurozone (4.2 per cent), Japan (3.1 per cent), China (7.6 per cent) and Latin America (4.0 per cent). These forecasts assume, of course, that the virus behaves, that is controlled.

We need to be wary of just absolute growth numbers that naturally look strong coming off low bases.

To give context, by 2022 the US would still be 1.5 per cent smaller than it was pre-pandemic, while other advanced economies will be about 2.5 per cent smaller. Emerging markets will still be some 8 per cent smaller than they were.

Clearly, at these levels, there will be quite significant output gaps, with GDPs well below where they were expected to be pre-pandemic, that could take several years to close with the limited prospect of sustained above-trend growth.

However, some economists (Summers at Harvard, and Blanchard at the Peterson Institute) are expressing concern about excessive fiscal stimulus beyond that warranted by the output gaps, and the risk of rekindling inflation.

Expect a clash of economists when others - such as the old-style Keynesian Krugman - are more focused on unemployment, with the US economy still some five million jobs short of where it was pre-pandemic.

He is s strong supporter of Biden's $US1.9 trillion COVID support package and has described Biden as the big spender that America needs.

Interestingly, US Federal Reserve Governor Jerome Powell has played down fears of inflation, focused on what Treasury Secretary Janet Yellen has set as the goal of achieving and sustaining maximum employment - indeed, her priority is for full employment by 2022.

It is worth noting that the US budget deficit was up by 90 per cent in the first four months of 2020-21, and the US public sector debt is already about 130 per cent of GDP.

Globally, public debt is approaching 100 per cent of GDP, with advanced economies up to 123 per cent GDP.

Hence, are there mounting risks of a global debt crisis?

The strength of stock markets is mostly the result of the massive injections of liquidity by central banks, reflected in the almost staggering blow-outs in their balance sheets.

They have lowered official interest rates to historically low levels, and are still committing to keep them there for several years.

Most of the stock market strength in recent years has reflected the performance of about by six to eight tech stocks.

Not surprisingly, there are mounting concerns of the sustainability of their recent price to earnings ratios.

For example, one calculation that I saw recently suggested that AfterPay would need to make an after-tax profit in perpetuity of at least $1 billion a year to validate its recent price to earnings ratio.

The recent extreme market manipulation of the GameStop share price is also indicative of irrational exuberance in stock markets.

In these terms, its hard to see how the stock markets haven't had a genuine correction.

Watch this space.

These economic excesses should be enough, in themselves, to keep governments, policy authorities, and the rest of us awake at night.

However, while there is still much uncertainty about the virus, and the realistic prospects of broad-based success with the vaccines, there's certainly mounting pressure to reopen economies.

Medical experts are concerned about the premature relaxation of their lockdown and other restrictions, but we seem to be slipping into rolling short shutdowns on the basis of a mere handful of new, and allegedly more virulent, COVID cases.

Expect the wholesale return to normality to be steadily pushed back, even well into next year.

Perhaps we should accept, as suggested recently in the Wall Street Journal, that the virus is here to stay and we have to learn to coexist with it, even with very significant changes in our daily lives.

John Hewson is a professor at the Crawford School of Public Policy, ANU, and a former Liberal opposition leader.